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AAPL $2.65t, MSFT $2.47t, GOOGL $1.89t, AMZN $1.72t, TSLA $1t, FB $853b, NVDA $764b Right now that's reasonably big tech in terms of publicly traded US tech co

AAPL $2.65t, MSFT $2.47t, GOOGL $1.89t, AMZN $1.72t, TSLA $1t, FB $853b, NVDA $764b Right now that's reasonably big tech in terms of publicly traded US tech companies. Everybody else is a long ways down. So. BRK $621b, JPM $476b, JNJ $419b, PG $362b, DIS $265b, KO $231b, VZ $215b, MCD $186b, BA $116, CAT $107b, MMM $100b All of those companies combined will fit inside Apple's valuation at the rate things are going. And just about every old-line blue chip with a consequential market cap is somewhere between pathetically slow growth and stagnant. Meanwhile big tech is still expanding. And you can replace any number of those companies with others, whether HD, or AT&T (T) or WMT or LOW or PEP or TGT, with much the same outcome. This article is, you guessed it, laughably, embarrassingly, false. Big tech will keep getting bigger in relation to most of the other quasi rotting blue chips. There is nothing coming up that will prompt a massive expansion of the old blue chips such that they're going to retake ground against big tech (not unless one believes all of big tech will be smashed to pieces by anti-trust - never gonna happen). The China boom is largely over, which means these old blue chips can't look forward to sucking off of that market any longer and there is no next China (nothing remotely comparable to that extreme of a boom). Are railroads and airlines going to start suddenly growing at 50% per year? Of course not. Productivity is about to skyrocket? Of course not. The US is going to suddenly take over the world's steel production? GM and Ford are going to put all of Germany and Japan's automakers out of business and every human on the planet is going to buy an extra vehicle? For no apparent reason companies like 3M are going to start growing rapidly? Pepsi and Coke are going to sell 2x the sugar water in an era that is turning against their core products (check out how pathetic Coke's business has been over the last 5-10 years)? How about big pharma, PFE's ass got saved by Covid, at least temporarily, as the vaccine threw them a bone. McDonald's, after so many years of stagnation (and given their saturation), is suddenly going to become a nice place to eat and start selling 2x the fries and burgers? Of course not. Americans are going to start buying a lot more Kraft box pasta or Heinz ketchup or Oreo's from Mondelez or soup from Campbell's? Of course not, it's all slow growth garbage. Campbell's is on a rocket ship to becoming a juggernaut $300 billion soup empire! Yeah, bullshit. And so on it goes. For most of these companies, if they're lucky, they'll have just enough pricing power to keep up with dollar debasement and not lose real ground over this decade. More likely some of these garbage companies like MCD or KO will lose 1/4 or more of their real business to USD erosion as their customers can't (and won't) pay $5 for a 20oz soda or $6 for fries. These companies have struggled for many years to gain ground in real-terms prior to the recent wave of inflation, it's only going to get more difficult for them (consumers will be trapped in hell between higher prices and eroding real household purchasing power, and that's all assuming household debt doesn't get more expensive (it's historically cheap)). If anything, the old blue chips will rot further and big tech will gain even more ground, over the next 3-5 years. Even if this market declines, relatively speaking big tech is still likely to take ground over time against the rest of the market.

FredPret 5y ago
You make some good points. However, note that there is a very long way to go for traditional industries. China is one big chunk of people, and they may be in for a rough couple of decades with their recent return to hardcore communism, but there is a lot of room to grow there still. And there is India and all of Africa. Untold numbers of people in the third world are rapidly approaching middle-class status, buying fridges and cars and so on. This will have the concomitant effects on the rest of the economic ecosystem, and tech will ultimately gain even more from more rich consumers. But it's not game over for the big old juggernauts.
- adventured 5y ago
  If any of that were true, we'd have seen it in the old-line industries sales growth during the last five years. That hasn't been the case at all (and wasn't prior to Covid either). Global growth is not going to accelerate in some great way this decade, it's going to be mediocre as China struggles mightily with growth and debt, among other serious problems. Japan, Germany, Britain, France will all remain stagnant (as they have for most of the past decade plus net). Other Asia will produce growth, but there's no guarantee US industrials will have great access to that growth; if those countries (eg Vietnam, Indonesia, India, etc) are smart, they'll pull a China and favor their own domestic context as they grow (which India already does quite a bit of for its part). > Untold numbers of people in the third world are rapidly approaching middle-class status, buying fridges and cars and so on Not made in America fridges or cars. Those fridges won't likely be made by US companies in Asia, either. Not cars made by GM or Ford (trucks actually, as they hardly make cars these days). And those relatively poor global median consumers can't afford Teslas (now or in 20 years). And those emerging consumers aren't buying $45,000 US trucks either. The best case scenario for old US industry is to tread water, to not lose ground while sparring with China and all the other emerging market companies. Most of the major emerging markets are going to come up ready to fight with their own champions, as China has (although not as potently as they've done it). The US old-line companies are at risk of getting their collective head punched in as a lot of new companies come up out of emerging markets looking to dethrone them. Mid-tier manufacturing will plausibly see a huge threat from emerging market companies pushing up the value chain, while high-tier manufacturing is absolutely going to take a direct assault from China (Boeing, Deere, autos, semiconductors, et al.). As it pertains to the US, the only type of company I'd be interested in being over the next decade, is a tech company with (ideally) global use potential. Everything else is largely going to suck big time, either due to pricing power problems with USD erosion domestically (constant battle there), or intense competition problems overseas (and or market access problems in locations like China). An extra aside: along with particularly not wanting to be Boeing this decade, I wouldn't want to be Starbucks (just wait until you see what China does to them).

FredPret 5y ago

You make some good points. However, note that there is a very long way to go for traditional industries. China is one big chunk of people, and they may be in for a rough couple of decades with their recent return to hardcore communism, but there is a lot of room to grow there still. And there is India and all of Africa. Untold numbers of people in the third world are rapidly approaching middle-class status, buying fridges and cars and so on. This will have the concomitant effects on the rest of the economic ecosystem, and tech will ultimately gain even more from more rich consumers. But it's not game over for the big old juggernauts.

adventured 5y ago
If any of that were true, we'd have seen it in the old-line industries sales growth during the last five years. That hasn't been the case at all (and wasn't prior to Covid either). Global growth is not going to accelerate in some great way this decade, it's going to be mediocre as China struggles mightily with growth and debt, among other serious problems. Japan, Germany, Britain, France will all remain stagnant (as they have for most of the past decade plus net). Other Asia will produce growth, but there's no guarantee US industrials will have great access to that growth; if those countries (eg Vietnam, Indonesia, India, etc) are smart, they'll pull a China and favor their own domestic context as they grow (which India already does quite a bit of for its part). > Untold numbers of people in the third world are rapidly approaching middle-class status, buying fridges and cars and so on Not made in America fridges or cars. Those fridges won't likely be made by US companies in Asia, either. Not cars made by GM or Ford (trucks actually, as they hardly make cars these days). And those relatively poor global median consumers can't afford Teslas (now or in 20 years). And those emerging consumers aren't buying $45,000 US trucks either. The best case scenario for old US industry is to tread water, to not lose ground while sparring with China and all the other emerging market companies. Most of the major emerging markets are going to come up ready to fight with their own champions, as China has (although not as potently as they've done it). The US old-line companies are at risk of getting their collective head punched in as a lot of new companies come up out of emerging markets looking to dethrone them. Mid-tier manufacturing will plausibly see a huge threat from emerging market companies pushing up the value chain, while high-tier manufacturing is absolutely going to take a direct assault from China (Boeing, Deere, autos, semiconductors, et al.). As it pertains to the US, the only type of company I'd be interested in being over the next decade, is a tech company with (ideally) global use potential. Everything else is largely going to suck big time, either due to pricing power problems with USD erosion domestically (constant battle there), or intense competition problems overseas (and or market access problems in locations like China). An extra aside: along with particularly not wanting to be Boeing this decade, I wouldn't want to be Starbucks (just wait until you see what China does to them).